Bengaluru — Gold inched higher on Tuesday as a softer dollar underpinned the metal, with market participants looking forward to a US Senate vote on increased pandemic aid.
Spot gold rose 0.4% to $1,877.96/oz by 31.4am GMT, after closing slightly lower in the previous session. The metal had climbed as much as 1.3% on Monday after the passage of a near $900bn US stimulus package. US gold futures fell 0.1% to $1,879.40.
Against a basket of currencies, the dollar fell 0.2%, bolstering gold’s appeal to other currency holders.
“While a weaker dollar has supported gold, the metal is going to have a hard time finding a supportive narrative given much of the good news — passing US stimulus, a Brexit deal — looks priced in while a resurgent pandemic may drive haven dollar buying,” DailyFX currency strategist Ilya Spivak said.
“Gold could come under more pressure as the Fed [US Federal Reserve] has little room to ease further and there is potential for at least a discussion about tapering quantitative easing if the recovery outlook improves next year.”
Investors now await the US Senate vote on President Donald Trump’s demand for $2,000 Covid-19 relief cheques after it was passed by the House of Representatives.
Gold, seen as a hedge against inflation, has gained more than 23% in 2020, largely driven by a raft of stimulus measures unleashed to mitigate the effects of the pandemic. Hedge funds and money managers raised bullish positions in Comex gold and silver contracts in the week to December 21, the US Commodity Futures Trading Commission said on Monday.
Silver rose 0.5% to $26.28/oz. Platinum climbed 0.8% to $1,039.66 and palladium was up 1.5% at $2,359.18.